Four Ways Small Businesses Can Save on Health Insurance Costs

  As the Affordable Care Act has redefined minimum essential health benefits and changed health care over the past five years, more employers than ever before are looking for ways to rein in their costs for health coverage. Some employers are shifting more of the costs of health insurance to employees; however, for many that is not a viable, long-term strategy because employees may begin to jump ship if their health care costs are increasing while wages remain relatively flat. There’s also the issue of the nation’s declining unemployment rate, which means greater competition for employees (who may enjoy lower costs or reduced cost sharing at other firms).So, you may be asking, what else can I do to save on health insurance? Below are four ways you can limit your out of pocket costs.

1. Shop around: If you’ve been with the same carrier or health plan for years, you may think all coverage is pretty much the same and the costs are all similar. That’s not at all true. Shopping around can make a real difference. If your region has a new insurer that’s just entered the market, they may be more aggressively priced than other health plans. Many PPOs offer different provider networks, which can dramatically affect costs. Narrow-network plans are typically less expensive, while broader network plans may have higher costs but offer the hospitals and doctors you and your employees may prefer. Your insurance broker can help you investigate your coverage and provider options.
2. Consider Defined Contribution and a SHOP or Private Exchange: A great way to control costs is to move to a Defined Contribution plan and implementation of an exchange. California firms with up to 100 employees can select either the Small Business Health Options (SHOP) exchange set up as part of the Affordable Care Act (ACA) or a private exchange, such as CaliforniaChoice, which has been serving California since 1996. Both exchanges give employers the ability to define the amount they want to contribute to employee premiums, while giving employees access to a variety of health plans from major insurers. Talk with your broker to find out more about how an exchange can help you control your health benefits costs, while offering your employees more health care choices than ever before.
3. Combine a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA): A high deductible health plan typically offers lower premium costs, while an HSA allows employees to use pre-tax money to pay their higher deductible and save for the future. HSA contributions are tax-deductible or if made through payroll deduction are pretax. Interest earned is tax-free. And withdrawals are tax-free for qualified medical expenses costs. Unlike Flexible Spending Accounts (FSAs), HSAs have no limit on carry-overs or when funds can be used. Money in an HSA belongs to the account owner, so there’s no annual “use it or lose it” provision like with an FSA. For 2017, the HSA contribution limited is $3,400 for an individual (up $500 from 2016) and $6,750 for a family.
4. Move from Employer-Sponsored to Voluntary Coverage: One proven way to reduce your benefits costs is to make ancillary benefits – like Dental or Vision coverage – voluntary. Then all of the costs are paid by those who participate. Another way to reduce costs is to eliminate Medical coverage for spouses. While the ACA requires employers to offer coverage to employees and dependents, it does not define a spouse as a dependent. The ACA’S affordability requirement also uses employee-only coverage as the criteria in determining whether coverage is affordable, so raising costs for spouses and dependent children is still an option some employers may want to consider.

Be sure to discuss your insurance needs and your company’s financial goals with your CaliforniaChoice broker to determine which of these ideas makes sense for your business. Get a quote today.